Editorial Opinion
Are fines disproportionate to the bad behavior and profitability?
By Janet Ahmad
January 26, 2006
 
Homeowners celebrate last week’s good news that KB Home agreed to settle a class-action lawsuit that earned them the legendary distinction as the only builder in the country that can no longer require binding arbitration. 

But for an article in the Los Angles Times last Friday titled, KB Home Chief Gets $34-Million Pay Package we would have been remiss if we failed to mention how profitable the giant of the industry has become with its government endorsed ‘Affordable Housing’ program. 

Be sure, if there is a good federal program to help the poor and less fortunate, you can bet there is a fortune to be made by big business and the home building industry will be there.

The key to the building industry’s success has been government (taxpayer) support.  To assure success the industry coined a new phrases ‘Affordable Housing’ to broaden the federal governments scope of possibilities, replacing the old more restrictive ‘low income housing’ term.  So for the past decade the political buzz words, ‘Affordable Housing’ has become anything but low income for the giants of the homebuilding industry and has in fact made billionaires on the backs of taxpayers.

The tragedy of it all is only now being felt and reported, as the new suburban slums begin to emerge and corporate giants begin to pay token fines, while taxpayers pick up the tab for many decades to come.

Today financial experts talk about the housing bubble, the highest foreclosure rates in history, epidemic proportions of mortgage fraud, and the defective home construction that has taken place.  However, little attention has been given to the link between federal housing programs, foreclosures and to outrageous profits of homebuilding giants like KB Home.   
 

For decades (since 1979) KB Home continued to thumb their noses at the Federal Trade Commission (FTC) and violate a federal consent order, as the once powerful FTC and HUD stood by and watched. 

After reading the Los Angles Times article, do you think the FTC $2 million and the HUD $3.2 million fines imposed on KB Home last year are disproportionate to their bad behavior and profitability?

See related articles: KB Home to Pay $2 Million Penalty for Alleged Violations for FTC Order
Los Angles Times: KB Home Chief Gets $34-Million Pay Package, by Annette Haddad